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 GHANA CIVIL AVIATION
AUTHORITY (GCAA)
Interview with
Wg. Cdr. A. K. Mensah,
The Chief Executive
September 9th, 1999
Contact :
Private Mail Bag – Kotoka International Airport Accra - GHANA
Tel: (233 21) 777 320 – 776 171
Fax: (233 21) 773 293
Telex: 2336 GHACAA
Sita: ACCXTYX, AFTN: DGAAYFYX
E-mail: center-gcaa@ighmail.com
Web-site: www.gcaa.com.gh
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The Ghana Civil Aviation Authority was officially established in May, 1986. Can you give us a brief historical background to GCAA?
The GCAA has been around for more than 40 years. During the colonial times the British were actually supervising the civil aviation in Ghana. Since it was more of a war instrument they had the British Regiment in charge of running and overseeing the Civil Aviation in Ghana. The British saw it as part of institutionalizing their position within the Sub-region of West Africa.
What is Ghana Civil Aviation Authority’s mission?
Our mission is to provide safe, secure and essential air navigation services and airport operations management at the best quality and to be a leading provider within the African continent and also competitive on the international market.
What are its functions?
First of all we perform the regulation of civil air transport, the management of the airport operations which include Kotoka International airport and the other airports in Kumasi, Sunyani, Tamale. We are also the main advisors to the government on issues relating to the development of civil air transport generally in Ghana.
The GCAA is one of the agencies that is involved in the Government's "Gateway Programme" To promote the project, what exactly is the Ghana Civil Aviation doing within this concept of promoting the Gateway Programme?
Basically we have 2 functions. First we are supposed to be the anchor agency to facilitate trade and social development of the country. Under that we have to change the way of doing business at the airport. Currently the GCAA combines the regulatory and the airport management functions and that is unique compared to other civil aviation organizations globally. Under normal circumstances the operations are performed by independent agencies or organizations but we have put the two together in this country. Under the Gateway we recognize that if we want to accelerate the development of the airport in order to position ourselves as a hub within the sub-region, we need to do a lot of infra-structural development which means more investment in terms of the financing to be able to do it. In our present position where we have to apply our own resources and the very constrained Government resources for development, we will not achieve the acceleration that we want. Therefore we intend under the Gateway to de-couple the airport operations from the regulation side and if we are able to do that then we will invite strategic investors to come and look at some of the areas of the airport. It could be the management aspect, infra-structural development or the expansion of the various domestic airports. Where possible we could even have someone Build, Operate and Transfer. So, you will see that the options become more open under the Government’s Gateway Programme. We are in the first phase where we will invite some consultants to link up with GCAA to be able to see which option would be the way forward for the next 10 or 12 years for the GCAA.
You see the Authority splitting up into 2 different agencies?
For the moment that is, in basic terms, the major thing that we can do. There are other options too. We can have two, three or four different agencies as is done in some countries. We may have the airport authority dealing with the airport operations but then that can also be split into domestic and international. Then we could have the air traffic and air navigation also as stand alone organizations; whilst the regulation side could stand independently. So you can count from 2 to 4 separate organizations depending on the traffic and the economic returns that each of them can have. The current GCAA organization as it is has been very successful and so if you want to replace it, it has to be something more useful and more viable than the present one. That is why we have to do the study in such a way as to come out with a very prudent decision as to what should be done.
Talking about the redevelopment of the airport here in Accra, I know that some development was done in the early 90’s. What else needs to be done before you feel that the airport is up to international standards?
At the moment it is up to international standards and that is why it is called Kotoka International Airport. However in every area of the world, developed or developing, the airport business is so dynamic that there is no airport that should be stagnant. Every 6 months you should reevaluate your position and keep going and normally in airport development it is planned 10 years ahead of it. As the traffic changes, like it is doing in Ghana because of the political stability, the leadership we have and the perception of people that they can invest here, you see that there is the need for us to effect changes to the airport every 6 months. It is a continuous development and we feel we will need additional area for aprons for more aircraft to have a parking place. We will also need a bigger warehouse for cargo which is increasing at about 13%. We also want to do trans-shipment to the Saharan areas. If we look at the terminal building site, its space, the movement of people within the terminal area then we need to increase the facility. We are handling less than 1 million passengers now but we expect 2 million by the year 2003. We have a 5 year corporate plan which began in 1998. To be able to facilitate 2 million people within the airport environment we have to think now and we are doing just that. Presently, the contractors have started working on the runway extension. Development at Kotoka International Airport has been a continuous process for the past decade depending on traffic and how we see things 10 years from now.
Have you already chosen contractors for the work or are you still looking for other people to come and invest in the airport project?
We did the first phase of the airport project between 1992 and 1994. Phase 2 is the one we are on at the moment. There are 6 phases of development for KIA. For the present one, which also combines some parts of phase 3, we have a contractor on the ground and that contract is supposed to be ongoing at the moment. But in reference to phases 3-6 we believe that it will be very difficult to have the internal cash flow to execute. It means we have to wait for the next 5 years to accumulate enough savings before we can actually commit resources there. The fact is that the Government does not give us any assistance to execute projects except through our own generation of funds.
How do you do that?
We generate funds from the landing, parking and from the over flights. We also do other businesses on the land side through estate development and concessions. When we get this money we put a portion of it into capital development or an assets replacement fund and when we have enough we embark on extra work. It takes a lot of time to generate enough funds before we can start and we believe that when we get strategic investors to come in they will take up this challenge.
The airport city project, which is in its first stage of construction at the moment, also forms part of the Gateway Programme and is intended to accommodate all the investors who are coming in and is a part of the Vision 2020 plan. Can you tell us a little more about the airport city project?
The airport city project is one of the many projects that the government wants to embark on to enhance the Accra-Tema area. The capital city of every country is supposed to give the right impression to those coming in and those who want to stay. Unfortunately, we in Ghana develop laterally where all the regions are tackled at the same time and so you do not have so much to put in the capital City, Accra. That is not satisfactory to the Government and that is why they have decided that some areas in Accra/Tema need to be taken care of such as buildings, roads, landscaping so that as you leave the airport there must be something that catches visitors' attention. This will show investors that we are disciplined, they would know where we are going and that makes it easy for business interaction between us and strategic investors. We at GCAA as the landowners are supposed to execute the 'Airport City' Complex and we intend to develop a complex of hospitality industry; hotels, shopping mall, offices, parking areas, recreational areas on the 40 acre area. In order to ensure that people build according to the concept for that area, we are doing the infrastructure; utilities, roads, water, sanitation, landscaping and everything that has to go into that area. We have already designated all the areas where every infrastructure should be and we have asked interested people to invest in that area through a competitive international tender. There has been quite a good response. 100 interested investors came for the tenders, 35 were actually serious. We evaluated them and 10 have been selected to develop the entire area and various segments that they choose. Once we have finished with the infrastructure, which should be by next month, then those investors who have paid up their commitment by the 15th of this month will then put up the buildings themselves. The complex is going to attract multimillion-dollar investments into that area, creating jobs opportunities and creating a one-stop shopping center and relaxation.
How many people will the city be able to accommodate?
Now that we are giving the offer to the people they have to come with their designs and out of that we will be able to know how many people are going to be employed, how many are going to interact but I think it is so strategically located that people are going to run away from the center of the town where you spend so much time in traffic to re-locate into the airport area. It should be a very high profile area where people can come and do very high quality business.
| You must have invested a lot of money into it already. What are your predictions for the kind of revenue that you are going to get back once it is completed?
We are taking this as a separate business center. This is the approach we have adopted. We are a state-owned enterprise but we behave as a private organization so we see business centers and create subsidiaries who handle the issue so then it does not encumber the main core business we do. To be able to attract the banks, we have to do a business plan and we have done that. For the infrastructure we required about 10 billion cedis. We also assessed what is available to lease out and we are able to apportion the cost over and above a certain margin therefore so we know our basic cost in putting up that complex. We also know the basic value of land. At the end of the day, so far as we are concerned, those who are going to invest in that will be able to pay back to enable us recover any money we put into that area. Strategically since they are going to be there for 50 or more years, it means that we can have annual rental, royalties and that will continue to improve our resources. With such additional revenue, we can review, the aero-nautical charges, the landing and parking fees to make us more competitive regionally because we can plow back some of the interests we are getting here to reduce our air side rates. With this we can make sure that we become the hub because there will be no better place to land than here since we will be charging you less than what our competitors are charging in Abidjan or Lagos. There is something cyclical about the whole initiative we are thinking by networking more of our operations.
One of the other things that you have done to increase the number people coming in and out of Accra is the "Liberalized Skies" policy between Ghana and the United States. Can you tell us exactly what this is and what the results are or will be?
Under the Gateway Programme we are supposed to pursue the "liberalized skies" policy. This policy has already been legislated by the Government. This was a government policy before our inter-reactions with the Americans and it extends to every country that wants to take the opportunity to fly here. Hitherto if a carrier wanted to operate here, there were these bilateral discussions which could drag on for many years without any conclusion because each party wanted to gain the advantage and it never helped anybody. Under this system the intention is to eliminate a lot of this bureaucracy and demands and made it so simple that once the potential operator can prove that he has an air worthiness credibility and he wants to do business between our 2 countries there would be no need to frustrate the person. That is the only way we can increase traffic around here and this will help the airport operators to pay back their investment. The Americans want to come in and they would have loved to do what they call the "Open Skies", that is once you sign the agreement with them any American operator can travel as many times as they want. But the Ghana Government believes that there must be a regulated transition to an "Open Skies" policy. In Britain for example, the Americans have a problem with this open air. In Canada it took a long time for them to agree on some of these concepts because the playing field was not the same. if a State does not negotiate well, that State will wipe away her own national interest and airline. You need to balance the pros and cons objectively. The first thing is to come out from the current regulated bilateral regime, then to a "Liberalized Skies" Policy and eventually to a "Open Skies" Policy when you think you are matured enough.
Ghana Airways has recently opened a route to New York and is due to fly to 2 more destinations in the United States. When are American airlines going to start flying to Accra?
This is something that we are looking forward to. Unfortunately for the moment the Americans prefer to use a proxy or alliance airlines to access Africa. They used to have PANAM doing direct flights but this has long ceased. In the whole of Africa I do not think there is any American carrier flying direct to any of the African ports. They use code sharing and alliances among others for the African flights. For example, They link up with the European carriers by flying over the Atlantic to Europe and then the European carriers do their feeding to and from Africa. The physical presence of American airlines, from our discussions, does not look like it is possible in the immediate future. We would have wished to see the American flag at the airport because their presence would have helped to drive business. The use of a proxy is not the best but we suspect that they have their own economic reasons for choosing this option.
Did you discuss the issue with President Clinton when you met him?
No. I did not but he had his people on the ground. There was a follow-up discussion. Last month the Ghana team was also in US and in September we are going for an air transport discussions in Atlanta.
Are you satisfied with the level of investment coming into the airport itself or the Airport City, or are you looking for more direct investments or partnerships?
For the moment I think it is satisfactory. We would wish to have all the developments but we do not want to have it all at the same time because at the end of the day you have got to pay back the loans. Therefore we must know how much our capacity is to service a loan. We are a very disciplined organization. Therefore we take as much loan as we think we can chew, swallow, digest and pay back. We have a very good record of being critical as to how much we can take based on our net revenue, what portion of that can go into servicing the debt and know how much of the different phases of development we need to tackle. Now that we are focused on the phase 2 development of Kotoka International Airport which is about $80 million, we think that maybe in the first 2 years we cannot take any extra loan so we need to continue on a low level for sometime. Anytime an investor comes up and says he has an option, I say its fine but the option can come provided you are prepared to withhold the servicing of that loan after 3 - 4 years.
I mean a form of short-term moratorium. But if the investor wants GCAA to refund the money concurrently with the $80 million we have already committed then I am afraid we will not be able to pay. I am always sincere.
When is Phase 6 due to be started?
We did a 15 year program. The first Phase was the one that started between 1992/1994. The rest of the phases continue all the way to 2006 but it is not inflexible type of project phasing. It is something like a master plan that we have done. We are executing phase 2 now but we have put some phase 3 items into it. When we did phase I, we took a few of phase 2 into it. It all depends on the situation. We do not want to create a facility that cannot be used in the short period. Therefore, we marry our demands and see how it goes with time and exigencies.
What would you say has been your greatest challenge since you have been the Director General of the Ghana Civil Aviation Authority?
The challenge is to be successful and it is not an easy thing. This was an Authority that had a lot of problems. I have been here for incredible 11 years and I might be one of the rare Chief Executives in African history to survive that long. It is not normal for Chief Executives to stay in any position for this long. In aviation history Chief Executive Officers serve about 18 months or 2 years and you are sacked. I think the key to our success is making sure that you can have a good vision and keep going and making sure that you succeed in order to have a success story. Once you have that you are okay. I also believe that we want to stay on top in the African region. Currently, we are among the only three countries that have a category one oversight status in terms of safety and security. Three out of over 50 African countries and I must add that the State of Ethiopia joined in only this year. Otherwise we were the only two States with category one status in Africa. This is the type of thing that we want to continue. Africa looks to Ghana as a pioneering nation. Regarding independence, we were first. Our history is impressive. We seem to be ahead and that is something that we should continue to do. We should always be and I am pleased that that is what the vision has been.
Forbes magazine reaches more than 4 million readers, mainly businessmen. What is your final message to them?
Ghana is a good investment, conference and tourist destination and a good target for people who want to invest in Africa and in particular the sub-region. I will advise them to look into Ghana first. They will really have chosen a place where their investment would be protected, and when it comes to paying back, unlike some African countries where they just ignore paying back, I think the Ghana Government is very disciplined and responsible. Therefore whatever investment comes in the Government of Ghana's prepared to pay back. Ghana is quite unique when it comes to leadership regarding presidency and Governance generally so that should encourage people to come in.
I thank you for your interesting interview.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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GHANA
